US senators write to banking regulators about potential crypto discrimination
Four US Republican senators led by Bill Hagerty have written a letter to the heads of federal banking regulatory agencies, questioning the ideological motivation behind recent regulatory moves in relation to cryptocurrency. They compared the regulators’ policy to the Obama administration’s Operation Choke Point.
The senators addressed Federal Reserve Chairman Jerome Powell, Federal Deposit Insurance Corporation (FDIC) Chairman Marty Gruenberg and Office of the Comptroller of the Currency (OCC) Acting Comptroller Michael Hsu. The March 9 letter said their agencies, along with the White House, have issued statements on increased oversight that have resulted in adverse consequences for the cryptocurrency sector, such as the closure of crypto firms’ bank accounts.
The senators referred to the joint statement released by these agencies on Jan. 3 that said in part: “Issuing or holding as principal cryptoassets […] is very likely inconsistent with safe and sound banking practice.” Additionally, they pointed to a February Fed policy statement that said, with specific reference to crypto, that “legal authorization is a necessary but not sufficient condition” for banking, and the Biden administration’s January “roadmap” that called for agencies to to “increase enforcement”.
“This coordinated behavior seems disturbingly reminiscent of Operation Choke Point,” the senators wrote. In that operation, federal regulators “exerted pressure on financial institutions to cut off financial services to certain licensed, legally operating industries simply because certain regulators and policymakers did not favor those industries.” They added:
“We are particularly concerned that excessive behavior by banking regulators will inevitably bleed into other legal industries.”
The senators asked a series of questions to the regulators. They asked how their increased oversight will help consumers, whether it’s possible for banks to offer services to crypto firms at all under the updated guidance, and whether the agencies plan to issue similar guidance for other industries.
Related: Banks under pressure from US authorities to cut ties with crypto firms
With the letter, the senators join a conversation in the crypto community about the voluntary liquidation of Silvergate Bank. That talk could heat up with the FDIC’s shutdown of Silicon Valley Bank.
Powell Hearing Today: US Senator Bill Hagerty said he will discuss cryptocurrencies along with the Fed’s interest rate plans during the hearing on The Semiannual Monetary Policy Report to Congress. Federal Reserve Chairman Jerome H. pic.twitter.com/xazQSFtK3p
— HappyMiner (@happyminerUS) March 6, 2023
Senators Mike Crapo, Thom Tillis and Steve Daines co-authored the letter. Hagerty introduced the Digital Trading Clarity Act in the Senate in October. This action will provide a safe harbor for cryptocurrency exchanges from any of the Securities and Exchange Commission’s enforcement actions.
